How are Industry Leaders Improving the Supply Chain?

The supply chain is not mere logistics or a way to get products from A to B. Leading companies use a much broader definition of the supply chain, linking multiple business units and organizations to drive improvements that ultimately lead to higher customer satisfaction.

The advent of sophisticated analytical tools has helped bring all units together – from traditional functions such as manufacturing and procurement to novel approaches like information sharing and value-added activities – and enabled the most adept supply chain managers to uncover hidden risks and opportunities in unstructured data.

In the words of McKinsey, “these companies have redefined customers’ expectations of service and their ability to bring innovation to the market, turning their excellence in supply chain execution into a powerful source of competitive advantage.” Amazon, anyone?

But the online giant and face of supply chain optimization is these days in good company. And the group of high performers that view the supply chain as a direct translation of their business strategy is growing.

So what supply chain improvements do industry leaders tend to seek?

End-to-end optimization

The use of analytical tools and platforms play a key role when leading companies organize their supply chains. Rather than dividing the supply chain up in different tiers, strong analytical capabilities have turned the focus on end-to-end management, sometimes in real time.

Focus on long-term objectives

Industry leaders favor supply chain strategy over network. As an article in Supply Chain 24/7 points out, many companies “begin reducing network costs before they define how the network can be fully leveraged to support the business strategy.” Such an approach tends to overlook the uncertainties associated with, for example, product mix and volume, expanding markets, and product returns. By using high fidelity data and business experience, industry leaders rely less on short-term data and immediate rewards and more on long-term business objectives.

Challenging long-held assumptions

The very best companies never get complacent. Even if they have reached the top, they continue to evolve and reinvent their supply chains. McKinsey explains: “By doing so, they are able to manage risks; respond to changes in the economic, technological, and competitive environment; and exploit new opportunities more effectively than their competitors.” Their supply chains stand prepared to answer the “What if?” as exemplified by a leading company in consumer packaged goods. The company has created a flexible network of supply chains and recipes for a brand of cleaning products. As the price of ingredients change, the network allows the company to swiftly switch to the most optimal path.

Companies in all stages of maturity can benefit from paying close attention to their supply chains. Your competitors certainly do.